Discussion Forum

MBI maintains close relationships with legislators, regulatory agencies, and other policy makers. We also monitor pending regulation and notify members of upcoming public hearings at the federal, state, and local levels.

- In 2007, Maryland passed a bill requiring improved IAQ measures in all newly purchased or leased relocatable classrooms. MBI fought to have language included that said the requirement would only be applied “prospectively” (going forward) after the effective date of the bill.- The Maryland Public School Construction Department did not draft and (nearly) finalize rules until the Spring of 2013. The rules were circulated to schools for public comment and about to be passed by the MD Board of Public Works. MBI was the only organization to submit comments opposing the rules because they required all relocatable classrooms SINCE October 2007 to meet the new standard, as that was the date the bill “became effective” in their minds.- We (the industry collectively) were able to get the item pulled from the BPW agenda several months in a row and made enough noise that now the bill has been re-introduced and written in language that addresses our original concerns. - The new bill (SB238 - attached) states that all relocatable classrooms CONSTRUCTED after JULY 1, 2014 will have to meet the new IAQ requirements.

So our efforts have paid off as follows:

We delayed implementation of this new requirement by one year as it was only one week away from being signed into law in June 2013.

The new law (if it passes this session) will not apply to your existing classrooms built since October 2007, only those constructed after July 1, 2014.

This gives you options as a company to market existing classrooms or to build new (or retrofit existing) units and market a higher IAQ model to the schools, presumably at a higher price.

Please consider that this legislation has a high chance of passage when planning your capital expenditures for 2014 in the Maryland classroom market.

Don’t hesitate to call or email with any questions on this, and we hope to see you at this year’s World of Modular conference in San Antonio!

Tom Hardiman, CAEExecutive DirectorModular Building Institute

Updated on January 21, 2014 by Tom Hardiman

Prevailing Wage Debate Hits Offsite Sector

Over the past few years, MBI has remained relatively quiet on the issue of prevailing wages. Our logic was that we did not want to draw unwanted attention to a very controversial issue, one in which the modular construction industry currently enjoys a significant advantage. However, as states such as California, Ohio and New York have started to weigh in on the issue, it’s becoming evident that this issue will continue to impact our industry.

History of Prevailing Wage: State prevailing wage laws (also known as “little Davis Bacon” laws) have been on the books for decades, modeled from the original 1931 Davis Bacon Act. The Act was intended to ensure a level playing field whereby all contractors paid the same “prevailing wages” on publicly funded projects. Practically speaking, the bill was passed to protect northern contractors from lower wage paying southern contractors.

Thirty two states as well as the District of Columbia have prevailing wage laws. Many people mistake the term “prevailing wage” to mean the average wage paid for a particular trade in a particular region. It is not. The prevailing wage is just that – the most common wage paid for a particular craft in a particular region. Given that it violates anti-trust laws and is illegal for business owners to collaborate with their competitors to set wages for workers, this process almost always results in the negotiated union wage rate in the region setting the prevailing wage.

If the trade union completes a prevailing wage survey and replies “we represent 100 laborers and our negotiated rate for laborers in this county is $25 per hour” that would become the prevailing wage rate, even if not a single laborer actually worked at that rate for the whole year.

Applicability: The Davis Bacon law, as well as most state laws, are clear on when prevailing wages apply. In most cases, prevailing wages apply on projects receiving public funding and applies to “mechanics and employers employed directly upon the site of the work.”

The exception to this rule is a fabrication shop set up in close proximity to the project established specifically and exclusively for that project, such as a concrete batch plant. In most cases companies that can demonstrate that their facility was not established exclusively for a particular public project have typically been excluded from the prevailing wage requirements for work performed “off site.”

California: Overturning decades of past practice and enforcement guidelines, the Director of the Department of Industrial Relations recently stated that off-site fabrication and transportation of materials by contractors and subcontractors to a public works jobsite are now subject to the prevailing wage law. According to recent opinion letters issued by the DIR Director, the reach of the prevailing wage law now extends to fabrication shops as well as the transportation of material to and from public works jobsites.

The decision stems from a case known as Russ Will Mechanical, Inc. In Russ Will, the general contractor subcontracted the HVAC portion of a public works project to Russ Will Mechanical who fabricated sheet metal items including ducts, flashings, square rounds and fittings in its permanent shop. The material was made according to the plans and specifications issued by the Community College for the modernization of its administration building. There was no dispute that Russ Will Mechanical paid prevailing wages to its installation employees. The sole issue was whether the company had to pay prevailing wages to its shop employees.

The Director determined that the shop work was covered under the prevailing wage law because it was performed by “workers employed by contractors or subcontractors in the execution of any contract for public work.” Unlike the federal Davis-Bacon Act, the California prevailing wage law does not limit coverage to workers employed directly on the site of work, the Director said, and the California law includes all work performed in carrying out or completing the public works contract regardless of where the work is performed.

The Director focused on whether the employer was a contractor or subcontractor as opposed to a material supplier which sells products to the general public. Thus, a bona fide fabrication shop that merely supplied material to a public works jobsite was not required to pay prevailing wages to its employees, whereas a contractor or subcontractor performing the exact same work would be required to pay prevailing wages to its shop employees. (Source: Cook Brown LLP)

The Director’s flip has obviously caused a great deal of confusion about prevailing wage applicability in the Golden State. MBI signed on with three other associations to file a friend of the court (amicus) brief on behalf of Russ Will’s position. That hearing is expected later this Fall.

In the meantime, MBI will be hosting a town hall event in Southern California in early September titled “Navigating Current Prevailing Wage Requirements” with legal experts from Cook Brown LLP.

Ohio: In June 2009, the Ohio Supreme Court ruled that prevailing wage law applied only to work performed on the site of a public improvement project, reversing the lower court’s ruling by a 6-1 vote. Justice Stratton noted that in 1990 the Ohio Department of Commerce adopted administrative regulations to facilitate administering the prevailing-wage laws. “These regulations were adopted following extensive hearings in which both industry employers and organized labor had opportunities to voice their concerns. They likewise refer to work performed on the job site and do not refer to off-site workers as being entitled to prevailing-wage rates.”

New York: In New York, a coalition of industry and agencies have joined together to push back on multiple attempts at enforcing prevailing wage in offsite fabrication shops. The coalition, led by the NY AGC, recently sent a letter to NY Governor Andrew Cuomo expressing opposition to such expansion.

It has long been held that the prevailing wage requirements of Section 220 of the NY Labor Law are not applicable to work on materials used in connection with a public work project, where such work is not performed at or about the site of the project, and is not customarily and normally performed at such site.

Washington: Currently, only Washington State has a prevailing wage rate specifically for “modular buildings” ranging from $9 - $14 per hour depending on the county. While a dangerous precedent, the good news here is that the state considers modular workers as its own “trade classification” rather than applying conventional trade rates (carpenter, electrician) in the factory. As such, the prevailing wage rate for a modular building worker will be the most common rate that a modular manufacturer pays its employees.

Why it doesn’t work for us: The modular construction process is all about efficiency – in terms of labor, time and resources. Prevailing wage laws are about protection and creating a false floor for wages. Organized labor groups have a responsibility to their membership to find work and negotiate pay rates. The problem is that there are so many specific trade unions, each with its own negotiated terms, that rates cannot be neatly applied in a factory controlled setting. Some modular companies are signatory to a union, but may not be signatory to the right union in a region, so the battle over wages, union dues, job classifications, etc ensues.

For example, in Northern California there are 35 different wage classifications – just for a laborer! There are another eight classifications for a carpenter ranging from $55-$62 per hour. Four more rates for drywall installer; electricians, crane operators, steel fabricators all have their own (and multiple) rates. Further, a craft person in one trade is NOT ALLOWED to perform work in another trade area, meaning that the carpenter cannot do the laborer’s work, even if is something as simple as cleaning up the work area.

Imagine the modular manufacturing process with all its efficiency and the building making its way down the line. Now imagine a foreman standing at each station trying to determine the appropriate wage to pay an employee for each task completed along the line, and the paperwork needed to document it all.

Summary: As the modular construction industry gains further acceptance and market share, we can most certainly expect an increasing effort towards prevailing wage expansion into our factories. We as an industry need to find the balance of paying our workers a fair and competitive wage while remaining competitive as a company. Expansion of depression era prevailing wage laws into the factories is a huge step back for an industry built on speed and efficiency.

Updated on July 23, 2012 by Tom Hardiman

IGCC Final Action Hearing Summary

The International Green Construction Code (IGCC) final Action Hearings took place in Phoenix at the beginning of last month. The industry was represented by three code consulting firms and their allies, MBI federal lobbyist Paul Miller and MBI Executive Director Tom Hardiman, among others.

MBI was successful in its key objective in gaining a “grandfathering” provision in the IGCC. This item was recommended for “approval as modified” by the May panel, but received two public comments, placing it on the agenda for Phoenix.

MBI was able to protect "wins" from the May hearing, but did not get a favorable vote on exemption for new construction of buildings under 5,000 sq. ft. The May panel recommended disapproval of this item and MBI needed to obtain a 50% vote from the voting reps to overturn this recommendation in order to hear our public comments. The panel voted 55% to 45% to sustain the May panel's recommendation to disapprove the small building exemption without considering the public comments.

MBI was also able to gain another win regarding “alterations” to existing buildings. Under the previous version of the IGCC, all alterations were subject to compliance. MBI submitted a comment again in an effort to provide some relief to the industry and to small buildings in general.

Our focus regarding the green code now shifts to the state level adoption process to attempt to gain additional relief at that level. Additionally, the next round of hearings for the 2015 IGCC cycle starts in about a year, with public comments due by January 2013. We plan to revisit our small building argument in that cycle.

MBI also has a strong core group of volunteers and consultants working on changes to the base model code - IBC, which are due in January 2012.

The Department of Industrial Relations (DIR) has not been consistent in its application of the California Prevailing Wage Law to offsite fabrication work. Originally, it held that offsite fabrication was only covered when performed by a contractor at a temporary fabrication facility set up to serve a public works project. San Diego City Schools, Public Works Case No. 99-032 (2000).

In 2003, the Director attempted to apply the Prevailing Wage Law to all offsite fabrication of material specially designed or made for a public works project. Cuesta College, Public Works Case No. 2000-027; City of San Jose/SJSU Joint Library Project, Public Works Case No. 2002-064.

The Schwarzenegger Administration withdrew this decision and reverted back to the original interpretation in the Director’s May 3, 2004 Important Notice. In the first Russ Will Mechanical decision, Director John Duncan decided to compromise and stated that offsite fabrication work performed by a contractor was covered, but the same work performed by a bona fide material supplier was not subject to the Prevailing Wage Law (Public Works Case No. 2007-008 (November 13, 2008)). In the 2010 Decision on Administrative Appeal, he reversed himself and adopted the early interpretation described above. The Superior Court refused to uphold the Director’s Decision on Administrative Appeal and remanded the case back to the DIR. However, Russ Will Mechanical’s attorney appealed the Court’s decision and the case is now pending before the Court of Appeal.

MBI is concerned about our members that fabricate offsite buildings, and how they will be impacted by the outcome of the Russ Will Mechanical case, despite a previous DIR ruling specifically stating that modular classrooms are not covered. As such, we are considering supporting an Amicus Brief in the Russ Will Mechanical case.

MBI will be hosting a conference call on Thursday, September 1 at 10:00 a.m. Pacific to discuss this issue. Dennis Cook, partner in the firm Cook/ Brown LLP will be providing background information about the case. MBI does not want to take any actions that may have an adverse impact on membership therefore it is critical that we hear from you on this issue.

Pennsylvania Industrialized Buildings Rules Finally Released

Beginning in early 2007, MBI pursued legislative changes in Pennsylvania that would have included non residential modular structures in the existing statewide modular program available to residential structures. Current practice requires approval from the local township (over 2,000). In June 2009 the Governor signed SB 195 into law (now known as Pennsylvania Act Number 13). The Act authorized the Pennsylvania Department of Community and Economic Development to draft rules to implement the program for non residential modular providers. Unfortunately, budget talks and administrative changes in the Keystone state continued to delay progress on this issue. MBI continued to meet with Mark Conte to share industry concerns and discuss possible rules. Last week, Mr. Conte made the first public draft of the proposed rules available. The rules can be viewed here: http://www.modular.org/marketing/documents/IH_regs.pdf.

The State of Maryland will not adopt the IGCC until the final publication is available, anticipated to be March 2012. At that point, the state will adopt the green code as "voluntary." Additionally, any relocatable unit labeled for Maryland prior to adoption of this code will continue to be allowed to be used in Maryland without being brought up to the new code.

The Phoenix green code became effective July 1, 2011. Based on version 2.0 of the IGCC, the code is adopted as an "optional code" unless specifically required through an ordinance of the City of Phoenix. The code can be reviewed here: Phoenix Green Codes.

After numerous run-ins with code officials over code compliance issues in construction trailers, the industry worked together to gain an exemption for buildings under 750 square feet from modular program requirements. While not fully addressing all the issues in the state, the effort did provide some immediate relief for this product segment.

Updated on August 22, 2011 by Erin Whitt

Industry Congressional and Senate Hearings:

MBI Member Testifies to Congress on VA Procurement Practices

Linc Moss, Senior Vice President & Chief Operating Officer of Ramtech Building Systems, Inc. testified Sept. 23, 2010 on behalf of MBI at the Subcommittee on Health of the U.S. House of Representatives Committee on Veterans' Affairs hearing on "VHA Contracting and Procurement Practices."

The purpose of the hearing was to identify potential weaknesses in the Veterans Health Administration's (VHA) contracting and procurement policies that prevent design-build contracts and to explore alternative solutions.

Throughout the construction industry there is a growing concern with the VA for soliciting construction projects that call for the "Design-Bid-Build" delivery method. This traditional project method is often more costly and less efficient than other delivery methods and its restrictive nature prohibits alternate forms of construction, such as modular construction, from being able to participate in the bidding process.

Design-build, on the other hand, streamlines project delivery through a single contract between the government agency and the contractor. It's a process that saves time and money, improves communication between stakeholders, delivers a project more consistent with the agency's needs and also allows our industry to participate. It's a process several other government agencies have embraced over the last decade, including the U.S. Army Corps of Engineers.

Within the last few months there have been two separate RFPs issued by the Department of Veterans' Affairs (VA) which modular construction companies were capable of performing. However, because the RFP was issued using a project delivery system that excludes alternative forms of construction, such as modular, these companies were unable to participate.

As a follow up to the hearing, MBI will be planning visits with members of the Subcommittee on Health one-on-one and hopes MBI's efforts will lead to the improvement of the VA's procurement practices for projects that will be beneficial to both our industry and the VA.

The US Senate Committee on Indian Affairs met Sept. 11, 2010 for a first-ever hearing of its kind to be held on an Indian reservation. Attended by Senators Al Franken of Minnesota and Byron Dorgan of North Dakota, the committee heard testimony on school construction and facility needs for the Bureau of Indian Education.

MBI past president Marty Mullaney, President of Satellite Shelters, Inc., was one of only five witnesses to address the committee. On behalf of MBI, Mullaney shared insight on the benefits of modular classrooms when building new schools or replacing or remodeling existing ones. In light of a severely reduced Indian education budget, the committee was particularly interested in hearing about ways to save time and money, as well as finding contractors that could work in remote locations - concerns that are easily addressed with modular construction.

Jack Rever, director of facilities for the Bureau of Indian Affairs, commented on Mullaney's participation. "I appreciate the MBI testimony at the hearing this past Saturday. The tone and professional approach before the committee speaks volumes about your organization."

Over the past year, four RFPs for medical facilities for the U.S. Army Corps of Engineers have contained the sentence “modular construction is not acceptable.” The sentence is buried deep in the RFP under a section discussing durability and is clearly “boiler plate” language that has been cut and pasted into subsequent RFPs. Several months ago, MBI contacted the USACE-MX to express our frustration over this language and was assured that it would not occur in future RFPs. Last month, the language appeared again for a medical clinic at Ft. Leonard Wood in Missouri.

MBI arranged for a series of Congressional Hill visits to inform various representatives, particularly those serving on military construction appropriations committees, of this troubling discrimination. Visits to Representatives Chet Edwards and Eddie Bernice Johnson of Texas, Tim Bishop of NY, and Joe Sestak of PA paid quick dividends. Congressman Sestak submitted a letter of inquiry on the industry’s behalf to Lt. General Robert Van Antwerp, Commanding General of the USACE (see Sestak Letter here: http://www.modular.org/marketing/documents/Letter_USACE_Medical.pdf). Within days, the USACE issued an amendment to the project deleting the offensive language (see amendment here: http://www.modular.org/marketing/documents/Amendment_Ft_Leonard_Wood.pdf).

This simple deletion represents a significant victory for our industry. Our collective voice and collaborative efforts are starting to have a real impact in Washington. While there is no guarantee that our industry will ultimately be awarded this project, we were guaranteed NOT to have the opportunity prior to these efforts. This deletion opens up tens of millions of dollars in future projects for our industry.

In addition to monitoring future USACE RFPs, MBI will continue to aggressively lobby Veteran’s Affairs to encourage the agency to move towards more of a “design build” process to create additional opportunities for our industry. We will also continue to meet with U.S. Air Force and Navy Officials to promote the advantages of our process.

Updated on July 12, 2010 by Erin Whitt

All public comments will be published on July 2nd, giving us an opportunity to see how the AEC community in general feels about this. I still do not believe this is on a lot of peoples radar screen.

The first public hearing will be August 14-22 in Chicago and we will have a much better feel for how this code will impact the construction industry after that meeting.

Updated on June 23, 2010 by Tom Hardiman

International Green Construction Code

The International Code Council recently made available for public comment its International Green Construction Code (IgCC). This code will become part of the I-Code family and be available for adoption in 2012. After reviewing version 1.0 of the draft, there are several items our industry needs to be aware of.

As written, the scope of this code will apply to virtually every aspect of construction where the code is adopted. Section 101.2 Scope states “The provisions of this code shall apply to the design, construction, addition, alteration, change of occupancy, movement, enlargement, replacement, repair, equipment, location, maintenance, removal and demolition of every building or structure or appurtenances connected or attached to such buildings or structures and to the site on which the building is located."

This scope is far more encompassing than any previous versions of the IBC and leaves no room for grandfathering of existing code compliant structures. The code goes on to mandate numerous LEED type requirements for all structures, a costly and impractical requirement for many small and/or temporary structures. If adopted as is, the lease fleet side of the business will cease to exist under the current business model in those jurisdictions.

Many feel that the political environment will ensure that some version of the IgCC will be available for adoption in 2012. However, it remains to be seen how many states or jurisdictions adopt it in whole, in part, or modify it upon adoption due to the extremely challenging and costly requirements contained in the code.

MBI is leading the charge to protect our industry’s investments as well as promoting the inherently greener aspects of modular construction. Doing so requires that we separate and define the two major segments of our industry: relocatable buildings and permanent modular construction. We cannot protect the fleet side of the industry without separating and distinguishing it from all the code requirements impacting the permanent side. Further, we cannot promote the green advantages of permanent modular construction without the code applying these requirements to all facility types.

MBI has established and is working towards several goals in this IgCC development:

At the end of the day, MBI believes that this code will not be widely accepted as written. We believe that the Task Force that developed this version 1.0 attempted to include every possibly green aspect of construction without all the answers, anticipating that the public hearing process would fine tune the document. We feel confident that a great deal of our industry was not considered in this process and we have an opportunity to define those aspects unique to our industry in this code.

Updated on June 11, 2010 by Erin Whitt

Lobbying Government Agencies

USACE: In 2005, the United States Corps of Engineers approached our industry along with other “alternative construction industries” inquiring how to get our members more involved in upcoming projects. The USACE was about to embark on its most aggressive construction campaign as part of BRAC (Base Realignment and Closure) and its MILCON Transformation Program. In June of 2005, a small group of MBI members offered the following recommendations to the Corps:

1) The Corps could increase the number of modular builders by breaking down contracts into four to six awards for each project: 1) site and infrastructure; 2-4) Specific buildings (barracks, office space, dining halls; 5-6) Specific building types geared toward pre-engineered metal buildings (warehouses, etc.)

2) Standardize building plans as much as possible. Allow for one type of building footprint for barracks, one for office space, etc. Exteriors could vary based on regional architecture

3) Open up requirements to Type V construction

4) Include the modular industry as a partner in USACE discussions, meetings, and events

After more conversation and input from a variety of sources, MBI Executive Director Tom Hardiman received the following email:

Mr. Hardiman – I am writing this e-mail to you as you have been identified as the appropriate POC for the following information.

Please be advised that the Louisville District, US Army Corps of Engineers, has issued Solicitation # W912QR-06-R-0008, for a Design-Build two-phase “best value” RFP to construct 384 barracks spaces at Fort Campbell, KY. This RFP is the first Corps of Engineers “test” project using the new MILCON Transformation Model RFP approach which allows all types of construction, uses commercial specifications and industry standards, and encourages innovation and creativity by the construction community. This includes modular construction. We wanted to make sure your group was aware of the solicitation that is currently on the street. The Phase 1 proposal is due 2 Dec 05. Specific information can be found in FedTeDs.gov and/or FedBizOps. Project Manager, Louisville District, US Army Corps of Engineers.

Since that time, the industry has completed over 10 million square feet of facility space needs for the USACE.

Department of Education – Impact Aid Program: During Congressional debate of the American Recovery and Reinvestment Act of 2009 (a.k.a. ARRA, stimulus bill), the Modular Building Institute aggressively lobbied for inclusion of “modular-friendly” language in the bill. When the smoke cleared and the bill was reviewed, the industry did in fact receive favorable treatment in one section – funding for the Department of Education’s Impact Aid Program.

The stimulus bill allocated funds to the Impact Aid Program to make grants to local school districts for new construction or renovation of existing facilities. MBI asked Impact Aid Program Director Catherine Schagh to address the industry at the 2009 Government and Military Construction Conference. At that conference, Ms. Schagh asked for interested parties to submit their names to be considered as “grant readers” for the process.

MBI Executive Director Tom Hardiman was selected as a grant reader and reviewed over fifty applications (about one-third of the total number received). In late May 2010, the final grant awards were announced, with four modular projects totaling over $10 million receiving funding along with three additional opportunities not specifying traditional or alternative methods. In all, the process resulted in 7 opportunities totaling over $20 million for the industry.

Updated on June 10, 2010 by Erin Whitt

Classroom Acoustics

The commercial modular industry recognizes the important role that proper acoustical design and construction plays in creating an optimal learning environment. We also recognize the vital role that relocatable classrooms play in maintaining manageable class sizes and providing schools with affordable swing space.

As the manufacturers and dealers of relocatable classrooms, our industry is committed to continuously improving learning environments using a balanced “whole-building” approach towards acoustics, energy efficiency, indoor air quality, day lighting and student comfort, while continuing to provide schools with affordable space.

The standard disregarded unique circumstances such as local funding capabilities, geography, population, and other site-specific issues which impact the school’s ability to meet the criteria. For these reasons, the MBI and several of its members participated in a working group with acoustical experts to develop an addendum to the standard specifically for relocatable classrooms. The standard can be found here: http://asastore.aip.org/shop.do?pID=581.